Amir Khan's fourth defence of his WBA light-welterweight title against Paul McCloskey in Manchester on Saturday has been thrown into chaos after Sky decided to take the show off pay-per-view because of a downgraded undercard.

The fight, which was to cost viewers £14.95, will now be shown free to subscribers on Sky Sports 3. Khan may lose up to £1m in ppv revenue; the Irishman McCloskey will probably take less of a hit as his original cut would have been considerably smaller. The champion, who was looking to earn £1.25m, was furious at the news and cancelled a press conference at the last minute on Thursday as his lawyers investigated what course of action to take.

The three-way promotion by Khan's company, Golden Boy Promotions and Hatton Promotions has been dogged by withdrawals since the main fight was confirmed in February. Matthew Macklin's fight against Khoren Gevor was the first to fall through; then Tyson Fury's hopes of fighting the former world heavyweight champion Hasim Rahman collapsed when the American refused to travel. Barney Francis, Sky's head of sport, decided he could not justify its pay-per-view billing, an unprecedented move.

Ricky Hatton was organising the card but could not persuade Francis that last-minute fights involving Fury, Rendall Munroe and Gary Buckland were of sufficient quality.

The main supporting fights on the bill were domestic and low-profile international bouts: Craig Watson's defence of his British welterweight belt against Lee Purdy; unbeaten local middleweight Martin Murray in a WBA International fight against the little-known Brazilian John Anderson Carvalho; and Rendall Monroe, the Leicester binman, in a scheduled 12-rounder at super-bantam against the well-travelled Minsk veteran Andrei Isaeu.

Tyson Fury, the unbeaten Manchester heavyweight with a large following, is still on the bill, but no opponent has been announced. If Rahman had agreed to their fight, it might just have persuaded Francis to go ahead with a ppv show.

Khan, meanwhile, has a £5m fight to look forward to against the American Timothy Bradley in May. For McCloskey, his big night has been ruined.

What the episode illustrates is Sky's determination to stand firm with promoters who do not deliver their promised line-ups. Their boxing budget has been drastically shaved and there is not much left in "the piggy bank", as one promoter used to call Sky's largesse.